Top 5 Reasons to Invest in Multi-Family Real Estate
1) Stable Attractive Returns
Multi-family real estate investments tend to be more stable and attractive. Wall street investing can be extremely volatile while multi-family real estate has a long history of attractive investment during both up and down market cycles.
2) Ongoing Cash Flow
Real estate investments are typically structured to provide steady cash flow to be distributed to investors on a periodic basis. Two option available to investors may include an equity investment or a debt investment. Equity investments typically provide ongoing dividends from revenues generated by rising rents and high occupancy. Debt investments are backed by an asset and generally provide a fixed return.
3) Equity Upside on Exit
On equity investments, investors could boost their overall return on sale after property appreciation i.e., capital gain on an asset. Property values may fluctuate in the short term, but they certainly rise over time. Good sponsors provide the benefit to investors through opportunistic buys and managing well allowing them to buy, fix and flip an asset in a shorter period of one to three years.
4) Deprecation Benefit
Depreciation is an accounting term, and it is a method that decreases the book value of a real estate asset but does not affect the market value of a property. Depreciation is a tax benefit tool, which allows an investor to offset passive income by using a passive loss on the books. This results in a net higher after-tax yield. Investors should consult their tax advisor as the tax benefits of depreciation are dependent upon an individual’s or entity’s taxable income.
5) Hard Tangible Assets
Real estate provides an opportunity to own interest in hard assets. Unlike the shares in a company that is subject to market whims on valuations, real estate is an asset class that is tangible. Every family needs a place to stay and well-managed assets improve in valuations with minor exposure to temporary ups and downs.